Swiss Suggest Fix for UBS Settlement to Go Forward

Igor S. Drabkin, J.D., Former IRS AttorneySwitzerland will ask Parliament to turn a UBS deal with the U.S. (which provided for disclosure of 4,450 accounts and  got UBS off the hook in a John Doe Summons case) into binding law.  That would plug a legal hole that is stopping Berne from honoring the agreement. Our readers may recall that UBS and the Swiss government agreed in August of 2009 to disclose 4,450 secret accounts belonging to U.S. citizens.  The settlement, however, hit a stumbling block after a Swiss court ruled in January of this year that such a transfer of data would breach existing Swiss law.

By asking its Parliament to approve the deal, Switzerland would eliminate a legal distinction between tax fraud and tax evasion in providing assistance to the U.S. and be allowed to deliver the data the IRS is seeking.  The January ruling  by the  Swiss administrative court created an embarrassment for the Swiss government as it risked prolonging a legal nightmare for UBS.  UBS said in a statement it intended to fulfill all commitments under both a criminal and civil settlement. This included providing relevant client account information to the Swiss tax authorities.